2013 (7) TMI 670 - AT - Central Excise

Cenvat Credit - Job Work - Benefit under Rule 4(5)(a) of the CENVAT Credit Rules Assessee could have followed the procedure prescribed under Rule 4(5)(a) of the CENVAT Credit Rules and could have returned the job-worked material without payment of duty Held that - This plea is not sustainable - Party did not opt for the facility provided under the said rule and neither the party followed the procedure prescribed therein. In the absence of exercising any such option or compliance to the procedure prescribed, the appellant cannot claim the benefit of the said provisions Decided against the Assessee Limitation - There was no specific written agreement for the job-work undertaken by the appellant in respect Tata Motors Limited - The fact that the conversion / job-work charges were not depressed because of the retention of the scrap by the party came to light only after questioning the officials dealing with the matter Held that - It is on account of the efforts made by the department during investigation, a clear picture has emerged as to why the job-charges were depressed - Extended period of time could not have been invoked in the present case Decided against the Assessee. Revenue neutral - Duty discharged by the appellant could have taken as credit by the raw material supplier Held that - Relying upon the decision in the case of Jay Yuhshin Ltd. vs. Commissioner of Central Excise, New Delhi 2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI , wherein held that the revenue neutral situation comes about in relation to the credit available to the assessee himself and not by way of availability of credit to the buyer of the assessee s manufactured goods - In the instant case the raw material supplier and the job-worker are totally different and distinct entities and hence the plea of revenue neutrality is prima facie not attracted Decided against the Assessee.

Summary

Issues involved:
Inclusion of scrap value and amortized value of moulds and dyes in job-work charges, applicability of Rule 4(5)(a) of CENVAT Credit Rules, 2004, limitation period for demand of duty, suppression of facts, revenue neutrality, financial hardship in stay application.

Analysis:
1. Inclusion of Scrap Value and Amortized Value: The issue revolves around whether the value of scrap retained by the appellant during job-work for another company should be included in the assessable value. The department argues that the scrap generated from raw materials supplied by the principal manufacturer depresses job-charges. The appellant contends that they could have followed Rule 4(5)(a) of the CENVAT Credit Rules to avoid duty payment. The department asserts that the value of retained scrap should be included, as confirmed in previous judgments.

2. Applicability of Rule 4(5)(a) of CENVAT Credit Rules: The appellant argues that they could have utilized the alternative procedure under Rule 4(5)(a) to avoid duty payment. However, the Tribunal found this plea unsustainable as the appellant did not opt for or comply with the procedure, thereby disallowing the benefit of these provisions.

3. Limitation Period for Demand of Duty: The appellant claims that the demand is beyond the normal limitation period as there was no deliberate suppression to evade duty payment. They cite various judgments to support their argument. The department, however, asserts that the extended period was justified due to the discovery of suppressed facts during investigation.

4. Suppression of Facts: The Tribunal observed that there was no specific agreement for the job-work, and the depression of job-charges due to retained scrap only came to light after questioning officials. This led to the conclusion that the extended period of time for demand was valid based on the facts unearthed during investigation.

5. Revenue Neutrality: The appellant argued that the exercise was revenue neutral since the duty paid could be credited by the raw material supplier. However, the Tribunal noted that the entities involved were distinct, and the plea of revenue neutrality was not applicable in this case.

6. Financial Hardship in Stay Application: The Tribunal found that the appellant did not plead any financial hardship in their application for stay of duty and other amounts demanded. This observation was made in the context of the stay application and did not affect the final outcome of the appeal.

In conclusion, the Tribunal directed the appellant to make a pre-deposit of the balance duty amount within a specified period, considering the arguments presented and the findings on each issue.